In FAQs about Affordable Care Act Implementation Part XI, the Employee Benefits Security Administration (the “EBSA”) provides guidance on the application of the Affordable Care Act to Employer Group Waiver Plans (“EGWPs”).
The FAQs say that Medicare Part D is an optional prescription drug benefit provided by prescription drug plans. Employers sometimes provide Medicare Part D coverage through EGWPs under title XVIII of the Social Security Act, and often supplement the coverage with additional non-Medicare drug benefits. For EGWPs that provide coverage only to retirees, the non-Medicare supplemental drug benefits are exempt from certain statutory health coverage requirements, more specifically, the health coverage requirements of title XXVII of the Public Health Safety (“PHS”) Act, Part 7 of the Employee Retirement Income Security Act (ERISA), and Chapter 100 of the Internal Revenue Code (the “health coverage requirements”). The health coverage requirements include: provision of health care coverage for dependents up to age 26; no pre-existing conditions on enrollment for care health coverage; no lifetime or annual limits on essential health care benefits; no rescission of health care coverage except for fraud; mandatory independent (external) review of benefit claims; and requirements pertaining to preventive care services.
Moreover, for EGWPs that are insured under a separate policy, certificate, or contract of insurance, the non-Medicare supplemental drug benefits qualify as excepted benefits under PHS Act section 2791(c)(4), ERISA section 733(c)(4), and Code section 9832(c)(4) and are, therefore, similarly exempt from the health coverage requirements.
The FAQs say further that, pending further guidance, the Department of Labor and other governmental departments that enforce the health coverage requirements will not take any enforcement action against a group health plan that is an EGWP solely because the non-Medicare supplemental drug benefit does not comply with the health coverage requirements.